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Construction Machinery Industry Commentary Report

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Construction machinery industry commentary report: 

CME expects that the decline in excavator sales in May will narrow, and the fastest sales growth in July can be positive

According to the forecast of CME (Construction Machinery Magazine), the sales volume of excavators (including exports) in May 2022 will be about 21,000 units, with a year-on-year growth rate of about -22.85%. Among them, the domestic market is estimated to sell 12,500 units, with a growth rate of about -43%, and the decline has narrowed; the export market is estimated to sell 8,500 units, with a growth rate of about 65%.

liu Gong(1)

The decline in excavator sales in May was significantly narrower than that in April, and the growth rate is expected to turn positive in July this year.

The growth rate of domestic excavator sales in May was -43%, which was narrowed from the 61% decline in April; the growth rate of export excavator sales was 65%, which was faster than the 55% growth rate in April, mainly due to the low base last year. , which may be related to the recovery of Shanghai port logistics. Considering that the domestic excavator sales in April/May were affected by the new crown epidemic, some of the demand will be delayed; if the domestic epidemic is effectively controlled after June, and the superimposed and steady growth will form a physical workload, the excavator sales will remain at the level of 20,000 units/month , the excavator sales in July will increase by about 15% year-on-year.

The full-year forecast is lowered, and the annual sales volume of excavators is expected to be 290,000 units, down 15% year-on-year.

At the beginning of 2022, the sales volume of excavators is expected to be 300,000 units, a year-on-year decrease of 12.5%. Considering the impact of the epidemic from April to May, the cumulative sales volume of excavators from January to April is more than 9,000 units less than our expectation. The sales volume is expected to be 290,000 units of excavators, down 15% year-on-year.

Steady growth will become an important theme in the second half of the year, and the marginal improvement of the fundamentals of construction machinery can be expected. The two regular meetings of the State from March to April have emphasized that "steady growth should be placed in a more prominent position"; The implementation of 102 major projects in the 14th Five-Year Plan paid off; China Railway's new orders in the first quarter increased by 84% year-on-year, of which infrastructure orders increased by 94% year-on-year. With the weakening of the base effect and the start of major projects, the decline in construction machinery represented by excavators in the second quarter will be significantly narrowed.

If exports increase by 50% this year, it can hedge against the 31% decline in domestic sales. From January to April, 33,787 units were exported, a year-on-year increase of 79%. The CAGR of excavator export sales in the past five years has reached 56%. In 2021, the export volume will reach 68,000 units, a year-on-year increase of 97%, showing an accelerating trend.

If a relatively neutral assumption (-15%) is adopted for the growth rate of excavator sales in 2022, if the export of excavators can maintain a 50% growth, the 31% decline in domestic excavator sales can be hedged.

Companies such as Sany Heavy Industry are expected to rely on internationalization, digitization and electrification to move from a Chinese leader to a global leader in construction machinery as China's current dominant industry. Chinese companies can rely on economies of scale, industrial chain advantages, and operational efficiency advantages to achieve global leadership. Industry leaders such as Sany Heavy Industry will gain a considerable market share by virtue of internationalization, digitization and electrification after completing domestic import substitution, moving from a Chinese leader to a global leader.

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